Treasury sets new potential debt default deadline of June 5
Treasury Secretary Janet Yellen issued a new letter to Congress on Friday that she believes the government won’t run out of money to pay all bills by June 5 — slightly later than the agency’s previous estimate, which was already foreseen on June 1st.
“Based on the most recent data available, we now estimate that unless Congress raises or suspends the debt limit by June 5, the Treasury Department will not have sufficient resources to meet government commitments,” Yellen wrote.
Republicans questioned Yellen’s methodology, with some accusing her of “manipulation tactics.”
“5. June? Yellen said it was June 1 earlier this WEEK. Republicans are not intimidated by their manipulation tactics.” tweeted MP Andy Biggs.
“Will the media join our efforts to demand that Janet Yellen show her work? I’ve been asking for this for three months.” called Rep. Bob Good.
President Joe Biden speaks to the media before leaving the White House after Camp David on May 26, 2023 in Washington.
Evelyn Hockstein/Reuters
As President Joe Biden left for Camp David on Friday night, he expressed optimism about the negotiations and hoped there would be more progress overnight.
“Negotiations are underway. I hope that by tonight we will know if we can reach an agreement,” Biden said
“Things are looking good. I’m very optimistic. I hope we have clear proof that we have a deal before noon tonight, but it’s imminent. And I’m optimistic,” he added.
The update buys much-needed time for negotiators to broker an agreement to raise the debt ceiling and avoid a catastrophic default. The so-called “X-date,” when the US will run out of funds to pay all its bills in full and on time, has always been fluid and based on daily federal tax receipts and expenditures.
Lawmakers left Washington for the Memorial Day break without an agreement. House Speaker Kevin McCarthy and President Joe Biden have said over the past few days that progress is being made but there is still no final compromise between the two sides.
ABC News senior congressional correspondent Rachel Scott has reported that negotiators are eyeing a possible deal to raise the debt ceiling and increase defense and veterans spending for two years while recovering unspent COVID-19 funds.
However, the biggest issues in the talks appear to be spending levels and job requirements.
Meanwhile, Yellen’s letter arrives just as the Treasury Department’s cash reserves are dangerously low.
Treasury Secretary Janet Yellen speaks to reporters during a visit to the Virginia Innovation Partnership Corporation incubator on the campus of the Center for Innovative Technology in Herndon, Virginia October 21, 2022.
Cliff Owen/AP, FILE
New Treasury Department data shows its cash balance was down to just $39 billion as of Thursday night. That’s down from around $60 billion at the end of last week — and $316 billion at the start of the month.
The Treasury Department also released data showing it has about $67 billion in “extraordinary measures” it can leverage.
In her letter, Yellen pointed out that more than $130 billion in payments is planned in the first two days of June, including to veterans and Social Security and Medicare beneficiaries.
“These payments will leave the Treasury with extremely low resources,” she wrote.